Media law specialist Ian Birdsey of Pinsent Masons, the law firm behind Out-Law.com, said that regional publishers in particular currently often decide not to run stories for fear of being exposed to expensive litigation. However, he said that the establishment of a new arbitration system for deciding complaints could give publishers greater freedom over what they print.

On Thursday Lord Justice Leveson said that a new voluntary regulatory framework should be set up by, but be independent of, the press and be underpinned by new statutory provisions.

Under his proposals (48-page / 522KB PDF) Leveson said that a new independent body, free from the influence of serving editors, should regulate the press and that a Board be established to govern the regulators' activities, appoint members of the body and have the power to fine publishers up to £1 million for breaches of standards. He said the Board should also provide for a new arbitration process through which civil legal claims against the publishers that sign-up to the new framework could be settled.

Leveson said the arbitration process should be "fair, quick and inexpensive, inquisitorial and free for complainants to use (save for a power to make an adverse order for the costs of the arbitrator if proceedings are frivolous or vexatious)".

The judge said that "incentives" were needed to ensure that publishers sign up to the voluntary regime, and said that publishers that do not should face the possibility that courts will deprive them of their "costs of litigation in privacy, defamation and other media cases" even if they are successful in those cases and even face having to pay "exemplary damages" if they lose such cases.

It should also be possible, under the proposed scheme, for courts to withhold costs from being awarded to wealthy claimants who had hoped to use the threat of court action to obtain a "settlement" from publishers instead of using the cheaper arbitration scheme, Leveson said.

Birdsey said that regional publishers, and not just public or celebrity complainants, would benefit from an arbitration system like the one envisaged by Leveson.

"Many smaller, regional publishers cannot afford to engage in costly legal battles through the courts, even if they stand a good chance of winning them," Birdsey said. "The effect of this is that these publishers prefer to settle cases that arise before they reach court or, in many cases, simply avoid publishing stories that they think could lead to a claim for damages being raised against them."

"If the incentives are strong enough to ensure that decisions made in arbitration are binding and that the system is used in the majority of cases, an arbitration process will allow publishers to fight claims where they believe they have a case, whereas under the current framework they may not always be able to afford to," he said. "Without the potential for expensive litigation hanging over them, editors and publishers will also feel a greater freedom to print stories that they may, at this time, fear could prompt claims against them that ultimately lead to costly settlements. Such an outcome is beneficial for a free press. The safeguard against publishers exploiting this enhanced freedom would come from the power to issues sanctions, such as fines, for those that overstep the mark, and from the possibility of court action still being a route for claimants to pursue."

Birdsey added that a new press arbitration system would likely differ from most arbitration processes where evidence and outcomes are confidential.

"Arbitration would have to be transparent in order for there to be public confidence in it," the expert said. "The system could look and feel like traditional arbitration but have the openness of a court process. So hearings could be public and judgments published, for example."